How To Read a Home Inspection Report
If you’re buying or selling a home, you know the home inspection is a critical event in the process. The home inspection is an opportunity to get a professional inspector’s unbiased view of exactly what you’re getting into.
There are some basic tips that can help you read a home inspection report more effectively. By taking a few minutes to familiarize yourself with these, you can be sure to get the most benefit out of your inspection and be able to speak freely about it with the home inspector, the buyer or the seller.
Follow the inspector during the home inspection
If circumstances permit, your very best means of understanding the home inspection report as a buyer is to join the inspector as he or she performs the inspection. There’s no need to be a pest, but you should feel free to ask questions if, at any point, you don’t understand what the inspector’s looking at or taking note.
Given the opportunity, most professional home inspectors will be more than happy to explain things as they go along, and answer any questions you may have.
A checklist report
Whether you’re buying or selling, you will likely have the opportunity to review the final report. Generally, the home inspection report will be in one of two formats, the first of which is a checklist.
A checklist report is just that: a list of items inspected plus the inspector’s rating, which will usually be limited to good, fair or poor. At the bottom of each section of the checklist there will usually be a spot for the inspector to insert comments about the items listed above.
Keep in mind that a rating of “fair” does not necessarily mean the item is in need of repair. Since “good” is the highest rating the inspector has available – even if the item is new – a “fair” rating can just mean the item has standard signs of age or weathering, like a spot of rust on a pipe or some scarring on the vinyl siding.
The drawback of a checklist report is that the lack of detail could result in more questions than answers. Don’t be overwhelmed or disappointed by this. Simply make note of your questions and contact the inspector for further detail as needed.
A narrative inspection report
A narrative report provides a more detailed rundown of the inspector’s findings, written in an article format in which the inspector basically describes what was inspected, how it was inspected and the results.
While the additional detail and thoroughness of the narrative report may seem at first glance to be an obvious improvement over the checklist variety, those same features could make the narrative report more overwhelming and more likely to create issues with the inspector’s terminology and descriptions.
If you have questions about what a section of the report means or what the inspector meant by a particular phrase, simply contact the inspector and ask.
Among other things, a Good Home Inspection Report should:
- Be well organized and well presented; the report should layout and presentation should be logical…it should be organized so as to provide a sort of road map, if you will, around and through the home
- Be well written…and be readily understandable by anyone irregardless of whether or not they have ever been to the physical property and irrespective of their technical background. The report should, to every extent possible, be devoid of technical nomenclature that requires yet more explanation to be understood; it should be concise and clear. A report that has to be interpreted is of little overall value
- Provide enough detail, description and direction to provide not only the client, but anyone involved in the transaction e.g. real estate agents, attorneys, mortgage lenders, etc., with a clear representation of the physical condition of the property
- Contain enough, but not an excessive number, of digital photographs relating directly to significant or serious issues. It has been said that a picture is worth a thousand words…this is true of a home inspection report. Photographs make it immeasurably easier to identify and understand any particular issue. On the other hand, a report loaded with photographs that lend no additional value to a report and are provided as filler content, or to provide a CYB (Cover Your Buttocks..) function for the Inspector, are best left out of a report
- Be presented using plain, but grammatically correct language. There is no place in a professional Home Inspection report for misspelled words, fragmented sentences, and general misuse of the English language (or whatever language is appropriate). A report filled with these types of deficiencies is, and again in my opinion, directly indicative of the professionalism of the Inspector
- Be presented in a straight-forward manner…if there are reportable issues present, then they should be presented in such a way as to leave no doubt that they are, indeed, issues. There should be no Soft-Shoeing…no Song and Dance…no Weasel-wording…just straight talk, accurate description, and effective commentary. Further, there should be some commentary provided to explain why an issue is an issue, and how to go about correcting that issue or otherwise obtaining other professional opinion regarding its correction
- Contain a well-designed Summary Section…a section of the report where all significant, and potentially significant, issues are clearly identified. General information, suggestion regarding routine maintenance, or recommendations regarding the upgrade of the property should not be included in the Summary section of the report. That type of information should most certainly be provided in the report for the benefit of the client…just not in the Summary section of the report
Negotiating Repairs After a Home Inspection
Buyers and sellers have a few different means of recourse when it comes to post-inspection repairs. Some buyers ask for the seller to handle the repair on their own, including arranging for the repair and paying for it to take place. Others ask for a price drop to balance out what they’ll have to spend to make the repair themselves.
Another common agreement between buyers and sellers following an inspection report is for the buyer to ask for a home warranty. Home warranties are insurance policies that cover the cost of repairs for things like appliances and heating and cooling systems for a set period of time. The average price for a home warranty is just over $600 a year, which is a relatively small amount of money for a seller to pay to meet some of the buyer’s approaching repair needs.
If a seller refuses to pay for some or all repairs, it’s up to the buyer to decide what they want to do. Provided there is no “as is” clause in the offer contract, the buyer may choose to cancel the sale and back out. Depending on the agreed upon contingencies, backing out of the sale may require the buyer to forfeit the earnest money that is already in escrow to the seller—usually about 1%-10% of the total sale price of the home.
As for the timeline of negotiations, different states have different rules. Some states (like New Jersey) require that the seller handle any agreed upon repairs within seven days, otherwise the buyer can cancel the sale without losing their earnest money.
Regardless of where you live and what requests are being made in terms of repairs after a home inspection, it’s crucial for both the buyer and the seller that any and all agreements are in writing, and signed by both parties. This prevents any miscommunications from taking place that could lead to discontent, and also ensures that everyone is entitled to get what they’re agreeing to.
Get Repair Credit, Not Repairs
Remember that the person who is selling the home you’re buying is on their way out. If you ask them for anything, they have no real incentive to do their best job. When you ask for repairs, you’re going to be the one who is going to have to live with the results, not them.
When a seller is packing up their home, they have little regard for your desire for a home that has repairs to last for several more years.
Taking a credit is a better idea than asking for repairs to be done. They have no incentive to be conscientious, so you’d be better off handling the repairs on your own. Also when you get credit, you don’t have to go back and check the repairs, risking far less drama and very little back and forth between you and the seller.
Top reasons home inspections fail
Sellers are often caught by surprise when a buyer’s inspection report comes back with a long list of repairs, even if the home isn’t very old. Here are some of the most common major issues that come up during inspections.
- Roofing issues: Roofing troubles can range from a few missing shingles to leaks or soft spots, or even a full roof replacement if the roof is old or failing.
- Electrical problems: The most common electrical issues include wiring that’s not up to code, frayed wiring, or improperly wired electrical panels.
- Plumbing issues: Leaky pipes (and resulting water damage), failing water heaters, and sewer system problems are some of the most expensive.
- Foundation problems: Cracking foundations, settling, and basement water damage can be costly fixes.
- Termites and pests: Termite damage, as well as the presence of other pests or vermin, can be a big red flag for buyers.
- Mold: Mold issues are a common problem, especially in wet or humid climates, and repairs can be extensive.
- Window and door issues: Failing window seals, windows and doors that don’t open and close properly, or broken panes are commonly found by inspectors.
- Asbestos or lead paint: This is a serious issue, and something you should be especially cautious of if you’re selling an older home. Many contracts have specific requirements related to asbestos and lead paint, so be sure to disclose everything you know.
- Chimney damage: Old chimneys can be a safety hazard, and they often need to be removed if not in working order.